The Joint Subcommittee on Human Resources/K-12 was called to order at 7:55 a.m., on Tuesday, May 11, 1999. Senator Raymond Rawson, Chairman, presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List.

Senator Raymond Rawson, Chairman

Senator William Raggio

Senator Bob Coffin

Senator Bernice Mathews

ASSEMBLY COMMITTEE MEMBERS PRESENT:

Mr. Joseph Dini, Jr.

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Parks

COMMITTEE MEMBERS ABSENT:

Mrs. Jan Evans (Excused)

STAFF MEMBERS PRESENT:

Chairman Rawson announced the subcommittee would be considering the budgets for Nevada Medicaid, Title XIX, and the Intergovernmental Transfer Program. He stated he would present information that would affect the way the budgets were closed.

Chairman Rawson stated, as the subcommittee considered the closing of the Medicaid budget, it became an important component in providing financing for a dental school. He called the committee’s attention to Exhibit C, a packet of information regarding Medicaid funding for dentistry, which would also be presented via overhead projection, in order to allow audience participation. According to Chairman Rawson, the presentation was not a vote in favor of a dental school, but rather was one of the pieces that would be necessary if the state proceeded with the dental school.

The dental school in Nevada would have a different mission than almost any other dental school in the country, advised Chairman Rawson, and the draft of the mission statement indicated the school would, "Provide dental care to those patients without access***". The key was that the dental school would actually provide access for the population in Nevada that currently had no such access.

Referring to Exhibit C, Chairman Rawson explained that Medicaid dollars appropriated for the first year of the biennium amounted to $13 million, however, not all of that money would be available for direction into a dental school. The money that was available was approximately $9 million, and if the Check-Up Program was added to that, the amount equaled approximately $11.8 million. Chairman Rawson stated the funding would need to be adjusted for a start date of October rather than July 1999, because it would take a few months to get the program up and rolling. Treatment locations were in place, but it was a matter of notifying patients and gearing up the paperwork.

Exhibit C, which contained a breakdown of funding available, would give the subcommittee an idea of the actual revenue available. Chairman Rawson indicated the money would be spent for dentistry, whether or not it was directed toward a dental school. He noted the state had a track record on dental spending, and knew the costs, regardless of the decisions made by the legislature. Chairman Rawson advised the proposed operating expenses for the dental school had been compiled for the Board of Regents by a consultant (Exhibit C). In the first year, the expenses would be $3.2 million, $4.7 million in the second year as more basic science faculty were brought on board, and in the third year, the cost would be $5.8 million. Chairman Rawson stated the expenses would actually peak at approximately $6.5 million, and by the fourth or fifth year, would begin to decrease. He reiterated that the expenses would not continue on an unlimited climb to an unknown amount, as costs were fairly explicit, and limited costs were predictable.

The additional treatment cost depicted in Exhibit C was the actual cost of providing treatment for 45,000 patients, and was derived from reviewing the experience of the current dental faculty practice in southern Nevada. The faculty treated just under 10,000 patients per year, and extrapolating from that would determine what the actual costs were for 45,000 patients. Chairman Rawson indicated that was approximately three times greater than the number of patients currently being seen, which would be a benefit. Addressing the managed care issue (Exhibit C), Chairman Rawson stated there would be no need to develop a federal waiver. He explained that Nevada already had a waiver in place for mandatory managed care, however dental services were not included, because there was no dental network in place. None of the Health Maintenance Organizations (HMO) had a dental network that could really treat those patients. Chairman Rawson indicated all of the larger HMOs had indicated a willingness to accept dental patients, and pass them through the program directly to the dental school.

Chairman Rawson noted that 11 percent of the 1998 Medicaid dollars for dentistry was allocated to rural Nevadans, while the statewide treatment figures in the exhibit had been compiled at 15 percent. Further, he explained, in reviewing the figures, if the bonding debt service was removed, the end result would be the "bottom-line" figure. The debt service would be considered at a later date, and essentially would provide the practice sites in northern Nevada, some sites in rural Nevada, and the dental school itself.

The end result, stated Chairman Rawson, was that the total amount of funds available, less operating expenses, would leave the funding balance or reserve. It was important that the dental school be able to access that money in either year of the biennium, and that it remain in reserve rather than targeted for reversion; it was Medicaid money, and would not normally revert. Chairman Rawson advised in the third year of operation the school would suffer a small deficit, however, by the fourth year, it would be back in a positive cash flow mode, and there would be sufficient cash flow, with the reserves, to carry the program.

The page entitled "Nevada State Board of Dental Examiners – County Locations of Licensed Dentists," in Exhibit C showed the areas of Nevada that would be affected. Chairman Rawson disclosed there were currently two counties that basically had a proper patient-dentist ratio, Washoe and Douglas Counties. All of the other counties in Nevada had a shortage. Clark County’s data indicated 2,800 patients for every dentist, and Chairman Rawson commented that some of those dentists actually were not practicing, which increased the ratio to 3,100 patients per dentist. The latest figures received from the American Dental Association (ADA) showed Nevada as 50^th in the country in that dentist/patient ratio. Chairman Rawson advised it was more difficult to secure an appointment with a dentist in Nevada than any other place in the country.

Chairman Rawson next referred to the "Treatment Centers" page of Exhibit C, explaining the status of the centers as follows:

• The Faculty Practice on West Charleston was in existence;
• The General Practice Residence was funded last session, was complete, and the Residence Director had been hired;
• The "Miles for Smiles" Bus program was up and operational, however, the bus quit running and there was a new bus on order;
• "St. Mary’s Bus" was currently running, and the state contracted with that program;
• The Community Health Centers also required a contract;
• The Dental School Clinic would not be operational for approximately 2.5 years;
• The Henderson Clinic also would not be operational for 2 or 3 years;
• Truckee Meadows Faculty Practice included a dental hygiene program currently in the planning stage, which should be under construction next year. As part of that, the program needed a Faculty Practice Residency Program, which would also include a treatment center;
• Yerington Teaching Station was being upgraded, essentially an upgrade of the facility so that students and faculty could be on site;
• Rural Operation Grants within the bonded funding would upgrade equipment in the rural areas, so those dentists could contract with the dental school in order to cover the entire state.
• The Health Science Center was a proposed center in Las Vegas, which would include a Prosthetics Oral Surgery Residency Program; and,
• A General Anesthesia Residency Program.

Chairman Rawson testified the organizations that supported the dental school were wide and varied, and included persons from union organizations, public entities, and private enterprise. There were pages of organizations listed in Exhibit C, and four times as many individuals that had come forward and offered support.

The whole point of the presentation, advised Chairman Rawson, was that the Medicaid budget should be closed with the dental monies directed toward the University and Community College System dental programs, wherever it was possible to do so. He felt that could be through either managed care or through private contracts. Chairman Rawson indicated that was the language that needed to be added to the Medicaid budget as the subcommittee reviewed it.

Chairman Rawson informed the subcommittee that also available for its perusal was his second handout, a pamphlet explaining why Nevada needed a new dental school (Exhibit D - on file at the Research Library, Legislative Counsel Bureau). He then asked if any subcommittee members had questions regarding any aspect of financial planning for the dental school. He commented that as the available monies had been developed through Medicaid, it had been done in a careful and conservative manner, and took into consideration that 40 percent of the Medicaid money was allocated through managed care. Of that 40 percent of the managed care allocation, 95 percent would be available to the school. The remaining 60 percent of the managed care allocation would be available based upon competition with other dentists, and Chairman Rawson assumed only half of that 60 percent would be available to the dental school.

Chairman Rawson advised he had not included money sources from anything other than Medicaid, because the school could function on Medicaid monies alone. There would also be union patients, private patients, specialty patients, et cetera, attracted to the facility, which would only enhance the economic picture. Since that source was an unknown, Chairman Rawson did not include it in any of the calculations.

There being no questions regarding his presentation, Chairman Rawson indicated the subcommittee would commence with budget closings.

Steve Abba, Senior Program Analyst, Legislative Counsel Bureau (LCB), advised the subcommittee there had been several adjustments to the budget, which primarily dealt with caseload growth projections.

The first closing decision for the subcommittee to consider was the issue of rate increases for Medicaid providers. Mr. Abba reported there had been a significant degree of discussion that The Executive Budget did not include rate increases for the upcoming biennium for Medicaid providers, with the exception of the pharmacy rate increase that was already built into the budget. Information was provided by LCB staff, which indicated the cost of providing a blanket rate increase to all Medicaid providers. The scenarios included a 1 percent increase, a 2 percent increase, and a 2.5 percent increase. Mr. Abba stated in the case of a rate increase for all providers at the 1 percent level, the additional cost was estimated at $8.5 million in the first year of the biennium, and $13.7 million in the second, which was split 50-50 between state and federal. A 2 percent rate increase for all providers would be approximately $17.8 million in FY 2000, and $28.8 million in FY 2001, again a 50-50 state-federal split. A 2.5 percent rate increase for all providers would be approximately $23 million in FY 2000, and $36.3 million in FY 2001, also 50-50 state-federal match.

Mr. Abba noted at the last hearing, staff presented information based on interest in providing rate increases to specific providers that were most in need of some type of adjustment during the upcoming biennium. The Division of Health Care, Financing and Policy (HCF&P) did a great deal of work in prioritizing provider groups into nine different priority orders. According to Mr. Abba, the criteria used by the division in determining where provider groups fit in the priority order, included:

• The issue of federal regulations;
• Known provider problems, such as home health agencies not providing services in rural areas;
• Alternatives to more expensive care;
• A poll of Medicaid staff; and,
• An evaluation of factors such as provider dependence on Medicaid rates and the number and type of recipients who would be effected if a rate increase was not provided.

Mr. Abba stated he would not review each of the providers in the priority groups, but noted the groups were arranged in priority order, and the costs depicted for the different provider groups indicated the General Fund share. For example, under priority level one, the first priority provider was home heath agencies, with a proposed rate increase of 40 percent in the rural areas, and a 20 percent rate increase in the urban areas. The cost would be approximately $819,000 each fiscal year of the biennium. The other number one priority group was personal care aides. Mr. Abba wanted to ensure the subcommittee understood that The Executive Budget did not provide for an increase to providers, and there was no requirement that the subcommittee approve such rate increases. The Balanced Budget Act of 1997 repealed the Boren Amendment, so provider adjustments previously required for long-term care facilities and hospitals were no longer a requirement.

Mr. Abba pointed out that the subcommittee did not have to choose any one of the providers, or choose them in the order presented by the division; individual or specific providers could be chosen, if the subcommittee so desired. The proposed provider rate increases contained a July 1 effective date, and the state typically provided such rate increases effective October 1. If there was interest in approving a provider rate increase for any particular provider, and it became effective October 1, there would be a reduction of 3 months funding for the first year of the biennium. Additionally, stated Mr. Abba, there was no requirement to implement a rate increase in FY 2000; a rate increase could be provided in FY 2001, which would further reduce the cost. If there was interest in taking such action, it also could be implemented on October 1, 2001, which would reduce the cost even more.

Mr. Abba informed the subcommittee if there were questions regarding how the division selected the providers on its priority list, there were persons present who could respond to those questions.

Chairman Rawson advised the subcommittee it needed to move as expeditiously as possible, and could consider the issues as discussed. He felt a case could be made for closing the budget as presented, however, any item that added expenditures would require discussion regarding how the money would be generated. Chairman Rawson reminded the subcommittee that items could be placed on the legislative "priority list" for decision toward the end of session. He felt the state simply could not afford the 1, 2, or 3 percent increases across-the-board for all providers on the division’s priority level listing. Chairman Rawson indicated he did not know where the state could come up with additional funding such as $22 million and $28 million. However, he advised once again that the subcommittee could look at the priority levels and select those providers who were most critically effected and place them on the "priority list." Chairman Rawson noted that staff felt the personal care aides and home health areas were the two issues that were currently being hit the hardest. Basically, services were not being performed because there was not adequate compensation.

Mr. Dini asked for additional information regarding the nursing facilities - skilled level, and nursing facilities - intermediate level, as contained in level 2 of the division’s priority list. Mr. Abba replied those were the provider groups that had a significant number of Medicaid patients living in nursing facilities, and when the division ranked the order, it was done in consideration of the agencies that depended on Medicaid revenues; a more in-depth analysis could be provided by the division.

Chairman Rawson inquired if division staff would like to comment on the priority level ranking. Janice Wright, Deputy Administrator, HCF&P, agreed with Mr. Abba’s explanation, noting that the division determined nursing facilities were a priority level two. The concern of the division was that the state plan currently offered the rate increases, and it would be difficult for the industry to accept the fact that those increases might not come through. Ms. Wright stated it was very difficult for the providers to be cost effective in supplying services for Medicaid clients.

Chairman Rawson asked if Ms. Wright wished to comment on any of the other providers on the priority level list. Responding, Ms. Wright disclosed the division had presented a prioritized list of providers, based on the criteria as explained by Mr. Abba. When the list was created, the division reviewed the most critical needs and also the areas that would cost the most money if a rate increase was not offered. For example, stated Ms. Wright, the number one priority was the home health agencies, and if the state was not able to offer individual clients who needed such services that particular home health agency service, those clients might have to enter an institution for the provision of services. She explained that was extremely difficult for the client, and was also very expensive. In the rural areas, there were no home health agencies that would offer those services. According to Ms. Wright, agencies had previously indicated that the primary reason they did not offer services was the inability to "make money" on Medicaid clients and, usually ended up losing money. Those were the reasons the division had provided the prioritized list to LCB staff for the subcommittee’s review.

Chairman Rawson queried members and the audience regarding further questions or comments; hearing none, he suggested the subcommittee close the budget as recommended. If the subcommittee was inclined to take further action, then it could place items on the "priority list." He suggested there were items from the division’s priority level listing that should be placed on that list for further consideration at a later date.

Mr. Dini inquired if the motion would be to close the budget as staff recommended, including dental school funding in the second year of the biennium. Chairman Rawson advised that was a decision point, and he would advocate for that action. Mr. Dini again asked if the subcommittee closed as recommended by staff, would that include funding for the dental school. Chairman Rawson stated the funding was there for the dental school, but it needed to be directed through the dental programs.

Mr. Abba commented that the decision unit currently under discussion by the subcommittee dealt with provider rates. The Governor had not included a rate increase within the Medicaid budget, with the exception of pharmacy, and providers on the division’s priority level listing could be placed on the list of potential "adds" depending upon availability of money. In terms of the issue of dental school funding, Mr. Abba indicated dental costs were built into the Medicaid budget for all provider groups, however, particular providers were not specified. The adjustments contained in the budget primarily dealt with caseload. Dental costs, just as hospital costs or long-term care costs, were built into the budget based on projected caseloads.

Chairman Rawson indicated he was unsure how to best separate the decision units, but if the subcommittee looked at the first unit, whether or not to address rate increases for providers, it could vote on that individual issue. It could then arrive at an overall motion for closure of the budget once all decision units were addressed.

Senator Raggio echoed the sentiments of Chairman Rawson, and noted at the present time it would create a problem if the subcommittee added additional funding for provider rate increases to the Medicaid budget. However, he felt it was an important issue and should be added to the "priority list," which he felt was still somewhat manageable. At the very least, the provider increases should be added to the list for consideration in FY 2001. If the subcommittee chose to take such action, Senator Raggio stated he would suggest consideration of rate increases for the division’s priority levels one and two in FY 2001, as an addition to the "priority list." Chairman Rawson asked Senator Raggio if he would make that in the form of a motion; Senator Raggio asked if it would be a motion for the entire closing. Chairman Rawson stated it would only be for the provider rate increase decision.

*************

Mr. Abba next addressed the budget decision regarding projected caseload increases. Every biennium during the legislative review of the Medicaid budget, there were caseload re-projections made in February or March. Mr. Abba indicated that based on the March caseload projections, there was a significant change from the caseloads that were included in the Governor’s budget in two specific areas, the Child Health Assurance Program (CHAP) caseload and the Disabled caseload. He had received a memorandum from the Department of Administration, which requested consideration for inclusion of costs for the increased caseloads in those two categories.

Reviewing the CHAP caseload issue, Mr. Abba noted that during the first year of the biennium, the Governor had created the Medicaid budget based upon approximately 27,000 CHAP recipients per month. The re-projection was for 32,185 recipients, a difference of approximately 5,200 recipients per month. For FY 2001, the budget was based on approximately 28,000 monthly recipients, and that projection now reflected a number of over 37,000. The cost associated with the CHAP caseload alone was approximately $9.7 million in FY 2000, $4.86 million of that being state funds, and approximately $18.8 million in FY 2001, with $9.4 million in state funds.

Mr. Abba further explained the Fiscal Analysis Division did review the caseload projections very closely, considering whether or not the division was projecting too high an increase, however, based upon caseload actuals from the month of July 1998 through March 1999, the CHAP caseload had increased over 11 percent. The out-year projections were based upon a 15 percent growth rate and a 13 percent growth rate, which appeared to be reasonable based upon the growth that had occurred over the past 8 to 9 months. Mr. Abba commented while the projection might seem high, based on the actuals, it was quite reasonable. The information received by fiscal staff did not point out a specific reason for the caseload growth, but there was testimony that CHAP caseload growth was occurring for a number of reasons. One of those reasons was that the applicants who formerly applied for TANF cash assistance were now applying for CHAP for their children because of time limitations. Mr. Abba reported the other primary reason, most likely, was the advertising of the Nevada Check-Up program. As word spread about that particular program, there would be more applicants, who probably also would qualify for Medicaid. A combination of those two factors was eliciting the growth.

According to Mr. Abba, the technical adjustment dealt with the projected caseload growth he previously alluded to. Those adjustments were in decision units M-102, M-200, M-201, M-202, M-203, M-204, M-530, and M-535, and would build in the "puts" and "takes" based upon the revised caseload projections. Further, Mr. Abba explained, there were two closing adjustments that were unrelated to caseload growth. One dealt with actions the subcommittee took when closing the Mental Retardation budgets. When the subcommittee closed the Mental Retardation budgets, it used funding that had been placed in the Medicaid budget for 54 new ICF/MR small beds. That money was used for a different purpose because the Division of Mental Retardation, Mental Health indicated it did not really need those 54 beds. In addition, that funding could be used in a better manner to alleviate the waiting lists in the Mental Retardation budget. Continuing, Mr. Abba noted that one of the closing adjustments, M-200, would delete the funding that had been provided in the Medicaid budget for the 54 new ICF/MR small beds. That reduction was approximately $6 million each fiscal year, half of that being state funds.

Mr. Abba stated the other adjustment to the budget that was unrelated to caseload growth was in decision unit M-100. That adjustment was based upon a lower Part-A premium cost than had been built into the budget. Medicaid paid Part-A and Part-B premiums to a number of eligible clients within the account; those were Medicare costs. The particular Part-A costs that had been built into the budget were higher than what was currently anticipated, so a reduction was in order, which would amount to approximately $675,000 in state funds over the fiscal year. Again, explained Mr. Abba, with the exception of those two technical adjustments, all the other adjustments in M-200 were based upon the caseload re-projections. In total, the net General Fund increase for Medicaid caseload growth was $1.7 million in FY 2000 and $8.3 million in FY 2001.

Chairman Rawson indicated he felt the subcommittee should follow the recommendation for the projected caseload increases, as it was basically similar to the Economic Forum, in the sense that it was the best possible projection. If the subcommittee voted against those projections, it ran the risk of running deficit during the upcoming biennium.

Mr. Dini inquired if the increases would be solely from the General Fund and, if so, how would the additional money be generated? Mr. Abba indicated the Medicaid budget was built on a 50-50 split between State General Fund and Federal Title XIX monies. The General Fund portion of the request for the caseload adjustment increases had been requested from the Department of Administration, and he thought it was part of the list of General Fund "adds" currently under review.

Mr. Abba also stated the caseload increase was unrelated to the reversion issue; Chairman Rawson asked if the Governor had covered the increase in his budget. Mr. Abba replied that the Governor’s request was for $5 million in FY 2000 in state funds, and approximately $12 million in FY 2001 in state funds. The adjustments that were made in removing the state and federal dollars for ICF/MR small beds, plus the adjustments made for the buy-in costs, had reduced that down to the $1.7 million and $8.3 million figure for state funds.

*************

Mr. Goldwater inquired if there was currently a good model for caseload projection, as it seemed that it took awhile for the division to get where it was presently. Ms. Wright advised the Welfare Division projected caseloads and HCF&P "plugged" that information in its model, Medicaid Projection Program (MPP), which also simultaneously received information from Blue Cross/Blue Shield, the fiscal agent on the cost, and together that model then projected the costs that were being presented. Mr. Goldwater asked if the MPP was working well for the division. Ms. Wright replied the MPP was working quite well, and each time it was tested, it was with a 2 percent error rate.

Mr. Abba stated item three for the subcommittee’s review was a component part of decision unit M-200. He explained because of caseload increases, the Department of Administration requested new staff for the Medicaid program, in order to accommodate that increase. The request was for two nurse positions, starting effective in FY 2000, with four new nurse positions starting at the beginning of FY 2001. He indicated to the committee that the Fiscal Division had reviewed the request and felt it was a reasonable request, however, also felt it was not actually associated with the caseload growth as previously discussed.

Mr. Abba disclosed there were over 1,700 long-term care beds built into the Medicaid budget that would come online in a transition phase over the biennium. There was a tremendous amount of work that would go along with the beds for the division once they came online in the areas of Pre-Admission Screening and Annual Resident Review (PASARR) screening and Medical Review Team (MRT) screening. Mr. Abba stated the Fiscal Division felt that was the workload that would generate the need for the new positions. The beds were part of The Executive Budget and he felt the positions should have also been included to accommodate that particular workload. The additional state cost to add the two positions in FY 2000 was approximately $40,000; in FY 2001, it would be approximately $137,000. According to Mr. Abba, if the committee approved the additional positions, Fiscal Division staff would be required to make further technical adjustments for phasing in the positions to align with the way the long-term care beds were being phased in over the biennium. If the positions were approved, Mr. Abba indicated the Fiscal Division would also like the authority to work with the division to complete the technical modifications.

*************

Mr. Abba stated budget decision number 4 was not reflected in the Medicaid budget and was a new issue discussed at the previous hearing. Senator Raggio advised both the Senate Finance and the Assembly Ways and Means Committees were familiar with the request for funding to pay the University Medical Center (UMC) settlement agreement, and further, there did not appear to be any alternative to the settlement.

*************

Mr. Abba reported the Medicaid Management Information System (MMIS) request was also requested as part of the revised Medicaid proposal and was not included in the Medicaid budget. The subcommittee had heard some testimony on the issue, and if there was interest in pursuing the MMIS system, the Fiscal Division’s recommendation would be to budget the positions and the up-front costs for the contracts, as well as the accelerated payments for pharmacy costs in FY 2001. It was also recommended that the majority of those funds, with the exception of the four positions, be reserved until the division completed its Cost Benefit Analysis, as well as its Advanced Planning Document. The division could then return to the Interim Finance Committee (IFC) to more specifically explain the benefits and long-term costs of MMIS, and also provide a better explanation of the approach used for MMIS. Mr. Abba advised that the consultant had not completed the Cost Benefit Report, and upon completion, the IFC could then make a determination to release the reserve funds to continue the project.

*************

The next item for subcommittee consideration was the Independent Choices Waiver (ICW) which, Mr. Abba stated, was also not included in the Medicaid budget. The issue had been discussed on a number of occasions, and there were two scenarios that had been discussed by the committee at the last hearing:

• Implementation of the ICW with 48 clients, with a cost of approximately $2.4 million over the biennium. That waiver would have a start date of January 2000.

• At a previous hearing, Chairman Rawson presented an alternative that would provide the same services, but the number of clients served would be capped at 25, and the start date would be April 2000, with the full 25 clients coming on board in FY 2001. The total cost over the biennium for that scenario was $1.3 million.

Chairman Rawson advised the key to his scenario was the fact that the legislature would authorize funding for 25 clients, but allow the division to treat as many clients as possible with the money available.

Mr. Abba pointed out that with a cap of 25 clients, one of the concerns was the waiting list. There would be an immediate waiting list with the 25-client cap, because at least 29 clients were already identified as eligible. The worst case scenario would be if clients under the Medicaid Disability Waiver, as well as clients identified as eligible for the ICW were included within one waiver, which would make the cost approximately $15 million in state funds.

There was another option, and Mr. Abba explained that information had recently come to the Fiscal Division from the Medicaid Division regarding the Physically Disabled Waiver, which the Medicaid program administered, and which currently served 125 clients, with a waiting list of 162 clients. For roughly $1 million in state funds over the biennium, the division could add 60 additional "slots" to that particular waiver. Mr. Abba noted there could be some crossover between the disability waiver and the ICW. Representatives from the division were present at the hearing, and could discuss that option in more detail. If that option was approved, the division would not only serve those additional 60 clients, but would add different services to include dental, meals, respite, and medical equipment for the Physically Disabled Waiver clients. Additionally, there was concern expressed at the last hearing in regard to a court case currently before the Supreme Court, and a representative from the Legal Division was present to discuss the issues of that case, and its application to Nevada.

Chairman Rawson asked that either a spokesperson, or a person from the disabled community, come forward and advise the subcommittee about the views of that community on which was the better plan. He noted the idea of adding 60 "slots" versus 25 was enticing, but did not think the subcommittee had enough information to make an evaluation.

Paul Gowins, representing the disabled community, stated he had been involved in the development of programs with the legislature for several years. He acknowledged it would be hard to say no to the proposal to serve 60 additional clients through the Physically Disabled Waiver. The concern was with the type of service that would be included. Mr. Gowins referred to Mr. Abba’s statement about additional services, noting if that option would provide the services that kept disabled persons from institutional placement, there would be no option but to support it. The only concern Mr. Gowins had was that the services allow individuals to actually be successful in the community. If one service happened to be eliminated, such as a wheelchair ramp, it would not do a disabled person much good. Actually, if the truth were known, Mr. Gowins indicated the disabled community would like to have both the Physically Disabled Waiver and the ICW. The concern, reiterated Mr. Gowins, would be regarding exactly what services would be offered, and to ensure they were in place to meet the needs.

Ms. Wright advised the division wanted to present an option to the subcommittee for its consideration. For approximately the past 10 years, the division had been administering the Physically Disabled Waiver. Currently, there were 125 persons on that waiver. Some of those on the waiting list had been on that list for quite sometime, and it was the division’s goal to serve more people. Ms. Wright indicated when the division reviewed the information presented in the severely physically disabled proposal, it attempted to examine the existing services provided. She noted the division already provided personal care attendant services as part of the Medicaid State Plan.

Further, Ms. Wright commented, in the Physically Disabled Waiver, the division also had the opportunity of providing homemaker services and a personal emergency response service, so persons could receive some aid immediately. Further, explained Ms. Wright, if the division provided additional services to the existing waiver, there would be no need to develop a new waiver and infrastructure, as the division basically already had the waiver in place. All the division would need to do was amend its waiver application to add the additional services, such as home served meals, dental services, and special medical equipment. Ms. Wright indicated the division would like to be able to do that, in order to ensure that some of the clients currently on the waiting list did not have to face the fact of institutionalization. She advised the division would like an opportunity to work through the existing Physically Disabled Waiver, which would provide more immediate services than a new waiver.

Chairman Rawson asked if use of the existing waiver would give the state any protection regarding the Olmstead case, which was currently pending before the United States Supreme Court. Ms. Wright indicated it would be difficult for her to answer that question, as she had no legal training, and did not feel she could provide a response.

Mr. Gowins commented he felt there were also basic philosophy differences between the waivers. The ICW did have much more consumer involvement, and was viewed as a demonstration project that would provide the services to people who normally could not survive in the community. Mr. Gowins felt there were some fundamental issues regarding exactly which clients would be able to stay in the community, and also the services that were needed. Mr. Gowins stated he would also like to comment on the Olmstead case. He contacted federal representatives regarding that case, and the information he received was that more than likely the waivers would be a good way to "hedge your bet" against the position taken by the Attorney General in the Olmstead case. Mr. Gowins indicated if he had a preference, he felt the ICW provided some services, structures, and consumer controls that would be difficult to give up. If, however, the subcommittee was looking at a short-term "fix" then the existing Physical Disability Waiver might be an alternative that would at least give 60 additional persons access to services.

Chairman Rawson asked Brenda Erdoes, Legislative Counsel to explain the advantages of the waivers as applicable to the Olmstead case. Ms. Erdoes stated she did not feel anyone could provide, with any certainty, the answer to that question, because it had not been considered. If Olmstead was ultimately upheld by the Supreme Court, the new twist would be that capped waivers, where the states capped them at a level that was much lower than their anticipated need, so that there was an immediate waiting list, would be a problem. The Olmstead decision would apply directly to the specified waiver program, but it was also likely that the decision would be applied to other waivers. If the subcommittee wanted to "hedge the bet" that Olmstead would be upheld by the court, it was likely that increasing the number served under a waiver program would be helpful. What was being reviewed in the Olmstead case was the great disparity between where the waiver was capped and where the state knew the caseload was. Ms. Erdoes noted there was no way she could provide an actual answer regarding the advantages of either waiver program.

Chairman Rawson stated he had fought for the waiver last session, and was disappointed that it was not implemented during the interim, which was an issue for him. He indicated he hated to "lose a hill" that had already been won in the past. Mr. Hettrick advised he would move for the 60 additional clients under the existing waiver, because it would mean more immediate services, and as long as the disabled community felt it would work for them, he wanted to see more people served.

Chairman Rawson clarified that such action would use the existing Physically Disabled Waiver, with added services to make disabled persons more successful at home.

*************

Senator Mathews stated she thought the spokesperson for the disabled community had voiced support for the new waiver process, and was the subcommittee saying the new waiver would not work. Chairman Rawson indicated it was a hard decision for all, and it was whether there were a few people served, or 60 people served.

Mary Jean Thomsen, Community Advocacy Coordinator, Northern Nevada Center for Independent Living informed the subcommittee that her concern was that from the ICWs original 48 clients, 29 were individuals who would come out of nursing homes. She did not feel anyone would come out of nursing homes by adding 60 "slots" on the existing waiver. Ms. Thomsen inquired if it was possible to include the condition that at least 10 or 15 clients would be targeted to come out of nursing homes.

Chairman Rawson noted the division had indicated it was willing to add services that would head in the direction of bringing people out of nursing homes, and asked Ms. Wright if that was correct. Ms. Wright replied that in the original estimate for the ICW, it was not that 29 people were in nursing homes, but only 29 people were identified as being Medicaid eligible, and maybe there were 10 in nursing homes. She advised it was always the desire of Medicaid to remove persons from a nursing home environment because of the cost. The Federal Government pushed the division pretty hard when it justified the cost of a waiver, to make sure that it was kept at less than the cost of institutionalization. Ms. Wright commented that one of the goals of any of the waivers was to do the very best possible to pull people out of the institutionalized environment. In the original proposal for the ICW that was submitted by the Department of Employment, Training and Rehabilitation (DETR), there were only 10 persons identified as actually being able to be Medicaid eligible and come out of institutions. Further, she noted, of those 10 persons, it was not determined whether or not they would choose to take that action.

Mr. Goldwater stated that was basically his question also, which alternative would be the best to move the most people from nursing homes into independent situations. The answer to that question was apparently not known, and using the existing waiver appeared to be as good as the other choices. Ms. Wright stated that was correct. In neither option had the division gone forward to actually discuss options with the individuals to see which ones would choose to go into which environment. She indicated Mr. Goldwater was correct, the division did not know.

Chairman Rawson informed the subcommittee a letter of intent could be added to the motion, if necessary, but the objective was to get as far as possible with the $1 million allocation. Mr. Jack Mayes, a member of the disabled community, suggested that perhaps some of those 60 "slots" could be reserved for individuals coming out of institutions. Chairman Rawson replied that was a given, and Ms. Wright had indicated the division would do that.

Chairman Rawson stated the subcommittee was ready to close the entire budget, according to the recommendations made.

*************

Mr. Dini noted the subcommittee’s decision would require review by the full committees; Chairman Rawson replied in the affirmative, noting all subcommittee decisions would require review.

Mr. Abba stated the Budget Division proposed to allow the Medicaid program not to meet the required reversion of $53.5 million in FY 1999, reducing that requirement to $18.3 million. According to Mr. Abba, that would allow the $30 million outlined in decision unit E-125, which was a proposed transfer to the Medicaid program of Intergovernmental Transfer Program (IGT) monies, to be made with surety for FY 2000.

There was one closing adjustment recommended by Fiscal Division staff, explained Mr. Abba, and that would be the authority to augment the transfer to the Institutional Care Fund by up to $300,000. The Institutional Care Fund was administered by the Nevada Association of Counties (NACO), and was used to help financially strapped counties with their portion of Medicaid long-term care costs. Mr. Abba reported currently there was less than $160,000 in the account. It was uncertain if there would be claims against the account coming to NACO before the end of the fiscal year. Therefore, the proposal would be to replenish the account up to, but not to exceed a level of $300,000. In other words, Mr. Abba explained, it would never exceed that amount, but could transfer in up to that amount. Mr. Abba indicated legislation would be required to allow the transfer to take place, and A.B. 386 would deal with the issue. He felt that bill would be the appropriate legislation to allow the transfer to continue for the upcoming biennium.

The second closing issue, announced Mr. Abba, was based on the release of the requirement to meet the $53.5 million reversion, plus new estimates on interest that would accumulate into the account for FY 1999, and augmenting the transfer of revenue that would come in from the participating hospitals. There would be the ability to increase the IGT revenue by $4.7 million over the biennium, which would be an increase in the reserve category for FY 2001. Mr. Abba stated Fiscal Division staff felt that was an appropriate place to put the additional money. As the subcommittee would recall, the IGT account was spent down to a level of $22.6 million, as recommended by the Governor, and with the increase, the level would increase to $26 million. There would be a significant "hole" in the out-years that would have to be "plugged" because of the spend-down of the money for the upcoming biennium.

Chairman Rawson indicated there was some language he would like the subcommittee to consider putting in the closing, which would direct the Department of Human Resources to conduct an internal review of the Disproportionate Share Program. In essence, the language would say that more support was needed for some of the rural hospitals, and there were other large private hospitals that did a significant amount of work that needed a more equitable payment directed their way. Chairman Rawson stated it was a difficult decision for the subcommittee without knowing all of the factors, and without agency recommendations. The department could then bring the results back to the Governor and the legislature next session.

Senator Raggio inquired where the proposed instructions to the Department of Human Resources would be placed. Chairman Rawson noted he would let staff put the request in the proper place, such as the Appropriations Act.

*************

There being no further business to come before the subcommittee, Chairman Rawson adjourned the hearing at 9:10 a.m.

RESPECTFULLY SUBMITTED:

Carol Thomsen,

Committee Secretary

APPROVED BY:

Senator Raymond Rawson, Chairman

DATE: